The 5th Circuit – The Conservatives’ Go-To Court

In the Obama era, the GOP’s go-to federal circuit for stopping executive orders and agency rules in their tracks was the Fifth Circuit, which covers all of Texas and portions of Louisiana and Mississippi. It has also been one of the go-to circuits for moving some of the conservatives’ favorite hobby-horses and ground zero for some of the attacks on any expansive view of government.

Fifth Circuit District judge Reed O’Connor is a George Bush appointee to the northern district of Texas who has long had a reputation for being a total hack. Of course, some of Trump’s and the GOP’s Senate newly confirmed judges, some of whom the ABA has ranked as unqualified, will soon be giving O’Connor a run for his money in legal decisions grounded in results and ideology rather than sound legal principles.

But Friday’s decision by O’Connor to declare the ACA unconstitutional stands alone right now as potentially one of the worst and most ungrounded decisions in recent history. O’Connor’s ruling was a frightening display of flawed judicial reasoning and ideological activism run amok. He deals with the issue regarding the standing of the two plaintiffs, who were specifically added by the plaintiff states months after the case was filed because of the weakness of their own standing, by declaring that, despite suffering no economic harm by reducing the individual mandate tax to zero, they are the victim of “arbitrary governance” because of the requirement to buy health insurance. As one conservative legal scholar noted, the judge could only reach that conclusion by “ignoring the actual operation of the law”. Later in the ruling, however, O’Connor virtually contradicts himself by dismissing the claim of the intervenor (Democratic) states about the applicability of the Commerce Clause by saying, since the tax is now zero, the mandate “does absolutely nothing” and therefore does not regulate interstate commerce. In addition, he totally ignores the issue of standing for the plaintiff states.

O’Connor also butchers the theory of severability, where one constitutionally flawed portion of a law does not invalidate the whole law, and his ruling against the applicability of severability actually relies on the dissent of four conservative justices in the NFIB v. Sibelius case in which the Supreme Court ruled the ACA constitutional. His rationale for ignoring severability also relies on his belief that there would be billions of dollars of losses for insurers and hospitals because of the shrinking risk pool with the individual mandate, effectively changing the impact of the entire law. Of course, reality has shown that belief to be false as we have been living with that scenario for the last twelve months and those billions of dollars in losses have not materialized.

Moreover, the decision totally ignores the fact that Congressional intent was clear, as multiple, unending attempts to repeal the law had failed and there was no intent or effort to repeal the entire law when the individual mandate tax was reduced to zero via budge reconciliation. Thankfully, O’Connor did not issue an injunction, nationwide or otherwise, so that the law will still remain in effect while the decision is being appealed.

Besides the details of O’Connor’s ruling, the timing itself reflected a brazen political bias. He waited until after the election so that those Republicans supporting the suit could spend most of their campaign lying about how they really wanted to protect Americans’ access to health care. In addition, despite a specific request from the DOJ not to make a ruling before the ACA enrollment period ended, O’Connor released his ruling the night before the last day of enrollment, historically one of the busiest days of enrollment in the period.

Most legal observers believe this ruling will not even survive its challenge in the Fifth Circuit, but the case is almost certain to go all the way to the Supreme Court. At that point, with the current makeup of the Court, it is hardly certain that this ruling will be struck down despite the belief of most Court watchers.

Sadly, this was the result that most legal scholars expected from O’Connor. It is specifically why this case was filed in his court, in a clear case of venue shopping, primarily because O’Connor is known for his egregious and ideological decisions. He ruled the Indian Child Welfare Act unconstitutional, the first time that specific legislation designed to help Native Americans has been struck down on the grounds of equal protection. In addition, he also struck down the Obama rule allowing transgender people to use the bathroom of their choice, issuing a nationwide injunction in that case. His reasoning was driven by the long-time conservative desire to curb the administrative state by restricting the use of guidance and forcing agencies to go through the lengthy process of rule-making instead.

Agency guidance documents have been a target for conservatives for years, who consider them a usurpation of the lawmaking functions of Congress. It is a long and time-consuming process for a federal agency to issue new rules. First, there must be notice given of the potential new rule, followed by a comment period where interested parties have the opportunity to respond and participate in the process of crafting the rule. That, of course, allows special interests, read business, to have a far greater say in the process. On the other hand, federal agencies have a much easier time issuing guidance which is essentially a non-binding rule. Guidance helps clarify how the agency will enforce or interpret particular rules, providing clarity and predictability to those potentially effected. But often the distinction between rules and guidance can seem difficult to distinguish.

The Fifth Circuit Court of Appeals (5CA) has been especially aggressive in reducing the use of guidance. It overturned one of its own district judges in ruling against the Equal Employment Opportunity Commission’s (EEOC) new guidance that interpreted the Civil Rights Act of 1964 as barring companies from blanket job rejections of anyone who had been convicted of a felony on the grounds that it might result in racial discrimination. The Court determined that the new guidance was actually a new rule and forced the agency to go through the normal rule-making procedures. The 5CA has taken a similar position with some requests for the Consumer Financial Protection Bureau (CFPB), ruling that their requests for information were overly broad. The general pattern reflects the current conservative view that federal agencies’ power must be severely constrained, epitomized by Steve Bannon’s desire to dismantle the administrative state.

It was in the Fifth Circuit that both DACA and DAPA were blocked on the flimsy grounds that it would create a burden on the state of Texas to provide driver’s licenses and unemployment insurance to undocumented immigrants as well as determining the order was an overreach of executive authority because it reclassified too many undocumented immigrants as legal residents, without providing any rationale for how much is too many.

As the dissent in the case noted, the order did not actually reclassify anyone, but merely advised prosecutorial discretion. As Carolyn King wrote in her dissent, “Because the DAPA Memorandum contains only guidelines for the exercise of prosecutorial discretion and does not itself confer any benefits to DAPA recipients, I would deem this case non-justiciable. The policy decisions at issue in this case are best resolved not by judicial fiat, but via the political process.”

In the ultimate irony, this decision by the Fifth Circuit was cited in another judge’s ruling blocking Trump’s Muslim ban, although it was primarily struck down for its violation of the Equal Protection Clause and its false and unsubstantiated claim of enhancing national security. After multiple failed attempts and being provided a virtual road map from the Supreme Court on how to satisfy its majority members, something that the Fifth Circuit did not supply in DAPA/DACA, the Muslim ban finally passed constitutional muster.

The Fifth Circuit was also involved in striking down the Department of Labor’s new order on overtime pay. Under the Fair Labor Standards Act, the Department of Labor is allowed to require overtime for workers at or below a certain salaries and duties. Those thresholds had been updated only once since the 1970s and the current $23,660 salary level would be nearly $50,000 if it had been indexed for inflation. In addition, misclassification of duties was allowing companies to engage in wage theft on a massive scale, with one estimate of $60 billion a year in stolen wages. Obama’s Department of Labor updated these thresholds in the spring of 2016 to go into effect on December 1, 2016. In addition to raising the salary threshold to $47,476 and indexing it to inflation, the Department also considered tightening up the exemptions on duties, which are designed to only cover executives, administrators, and professionals, but eventually dropped that idea.

This proposal, which would have put more money in the hands of millions of workers, was obviously opposed by business who went searching for the most sympathetic venue, which, of course, was the Fifth Circuit. District Judge Amos Mazzant of the Eastern District of Texas not only initially put a nationwide temporary restraining order against implementing this rule but then ruled that the Labor Department overstepped its statutory authority by focusing exclusively on the salary level and not on the duties. Again, Mazzant did not deny the Labor Department’s right to raise the salary level, which it has done without controversy since the passage of the Act in 1938, but simply felt that the new level was too high and offered no guidance as to what level he might actually find acceptable. With Trump’s election in November, 2016, the possibility of raising the salary level essentially died.

Lastly, American business leaders constantly complained about the need for “certainty” during the Obama era. That certainty, however, does not exist for most Americans. As an older worker who made some specific working choices because of the existence of the ACA, the constant threat of its removal puts me in medical and economic jeopardy and makes planning for my immediate future more difficult than it should be. In addition, this decision lays bare the bizarre Republican obsession with denying health care to everyday Americans. That, along with climate change denial, are two enormous issue that reflect the enormous greed and cruelty that drives much of the party.

Ian Millihiser wrote this weekend that “I fear that a lot of liberals generally — and liberal litigators in particular — have no idea how bad the federal courts have become or how many difficult choices they will need to make about what must be done to save democracy from Republican judges.” Remember, O’Connor was a George Bush appointee. Trump’s judges are, on the whole, far worse. The Fifth Circuit, and this ACA ruling, is, in so many ways, proof of Millhiser’s comments..